US futures are well into negative territory ahead of the open and the jobs report has not delivered the lift they need, following news that US President Donald Trump has tested positive for Coronavirus.
This was the final jobs report ahead of next months election and provides crucial insight into the strength of the recovery ahead of next month's election. It's been hotly anticipated all week but the reaction to it suggests it didn't deliver. Of course, coming hours after the news from the White House, it's easy to understand why it may not have packed the usual punch.
Still, as far as the data is concerned, job growth was strong again last month, with unemployment falling back to 7.9%. The non-farm payrolls number was short of expectations, which may come as a surprise given the positive surprises we've seen in the employment data this week, but that was largely offset by an upward revision to the August number.
Ultimately, it doesn't move the needle as far as either candidate is concerned next month. Trump will continue to pitch himself as the best candidate to return the economy to greatness and blame the destruction of it on the "China plague" while Biden will undoubtedly paint it as a recession of Trump's own making. These numbers don't really change anything and the fact remains, it's those on Capitol Hill that hold the key to the recovery continuing or suffering a devastating setback.
Trump's positive Covid test fuels market uncertainty
The jobs report was somewhat overshadowed by the news that Trump tested positive for Coronavirus, which has weighed heavily on markets this morning. It's a bit of a cliche but the markets do hate uncertainty and today is evident of that. We don't even know what impact this will have on Trump's health, let alone the implications for the election next month or his ability to campaign in the interim.
I don't think we can read too heavily into the market reaction though, with everyone dermanding to know what it means. Is it a reflection of the mood towards a Biden Presidency? I would argue not. That's not to say markets will favour him a month from now if he wins but I don't think that's what's going on.
Not to mention that the initial reaction came against the backdrop of more failed stimulus talks on Capitol Hill and prior to the jobs report, which have probably contributed to the risk-off mood. Everything should become much clearer in the coming days.
Oil on the decline again
Oil prices are slipping again today, in line with the broader risk off move. While some will want to link this to the election, or the prospect of a Biden victory, I'm not really buying it. This is something that's been building recently and the only reason it hasn't materialised earlier is due to the warnings from the Saudi Energy Minister.
The simple fact remains that we're heading into a worrying period for Covid and the impact on the global economy and oil demand will be significant. OPEC+ will likely be forced to hold a special meeting prior to December if they want prices to hold around $40.
Gold running on fumes
Gold is continuing to push hard against $1,900 and is having a little success but it's struggling to gather any significant momentum above these levels, which could be a sign of weakness. The jobs report didn't cause too much of a stir for the dollar and so the impact on gold has been minimal. If the yellow metal fails to secure a weekly close above $1,900, it may start next week on the back foot. The momentum indicators are favourable for the yellow metal and the jobs report hasn't changed that. This will be a very interesting test and more downside may follow.
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